Hero MotoCorp gearing up for premium entry

The two-wheeler major has formed a number of alliances with offshore firms but an outright acquisition would be a first for the New Delhi-based company.Sharmistha Mukherjee | ET Bureau | February 09, 2018, 08:46 IST

Munjal said HMCL is open to mergers and partnerships, especially in the segments where we are either not present or we have a very small market share.New Delhi: Hero MotoCorp, the world’s largest two-wheeler manufacturer by volume, wants to expand its footprint beyond commuter motorcycles, and is open to taking the inorganic route to the premium segments of the market.

“We are open to arrangements and partnerships, especially in the segments where we are either not present or we have a very small market share,” chairman Pawan Munjal told ET on the sidelines of Auto Expo 2018. “Right now, we do have healthy cash reserves. We are open to mergers and acquisitions.”

Since the termination of its joint venture with Honda Motor in 2010, Hero MotoCorp has formed a number of alliances — with AVL (Austria), Engines Engineering (Italy) and the now-insolvent Erik Buell Racing (EBR USA) — to upgrade technological capabilities. But an outright acquisition would be a first for the New Delhi-based company.

While acquisition is one option, Hero MotoCorp is also working on organic growth. It plans to introduce multiple motorcycle models in the premium segment over the next 6-18 months.

To begin with, it recently took the covers off two 200cc motorcycles, the Xtreme 200R and an adventure bike called XPulse 200. All its current products are in the below 150cc range.

“There is a lot more to come going forward, both in this range and bigger ranges as well. Clearly, the idea is to gain a higher market share in scooters (and) come to a respectable level first in the premium segment,” Munjal said. He, however, said Hero MotoCorp would not take its eyes off the bread-and-butter commuter motorcycle segment.

Hero MotoCorp sells more than a dozen motorcycles from the HF Dawn (97.2cc) to Xtreme Sports (149.2cc), priced up to Rs 81,269. In the nine months through December, it sold 5,453,102 two-wheelers, a nearly 11% increase from a year earlier. As much as 75% of the sales came in the entry-level motorcycle segment — engine capacity of 75cc to 110cc.

Meanwhile, Hero MotoCorp has also commenced work on vehicle electrification. “Work is now going on seriously at the R&D centre, both in motorcycles and scooters. I myself saw recently the prototypes and the testing,” Munjal said. “We are not in a position to say today when we are going to launch. But there is work going on various fronts — battery, battery management, motors...”

​​This comes as a surprise to the industry as Rakesh was recently elevated to the position of Directo Sales and Marketing which was the third promotion for him in six years of his tenure in the company.